Arbitration is a dispute resolution process for resolving conflicts outside of the court system. Like a judge, the arbitrator (or arbitration panel) renders a binding decision at the conclusion of the case. Arbitration has sometimes been viewed as more employer-friendly than traditional litigation and may have certain other advantages, including greater confidentiality protection for highly sensitive disputes.
Last year, in Epic Systems Corp. v. Lewis, the U.S. Supreme Court held that agreements between employers and employees to resolve all disputes through arbitration – as opposed to lawsuits and class actions – are enforceable under the Federal Arbitration Act (“the Act”).
Earlier this year, in Henry Schein, Inc., et al. v. Archer & White Sales, Inc., the Supreme Court held that where an arbitration clause in a contract requires an arbitrator to decide the threshold question of whether the dispute is subject to arbitration in the first place, that decision must be left to the arbitrator and cannot be submitted for a court to decide.
Both decisions can be viewed as business-friendly, affirming that employers can “opt out” of the court system so long as they do so through an enforceable contract provision. These cases also serve as a reminder that contracts are enforced based on their plain language, and thus, careful drafting is paramount in achieving desired results.
Questions about arbitration? Need help drafting a contract that includes an arbitration provision? Contact Wright Beamer today at (248) 477-6300 or firstname.lastname@example.org.
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